Economic Effects
In transport, demand can be measured in numbers of journeys made or in total distance travelled across all journeys (e.g. passenger-kilometres for public transport or vehicle-kilometres of travel (VKT) for private transport). Supply is considered to be a measure of capacity. The price of the good (travel) is measured using the generalised cost of travel, which includes both money and time expenditure.
The effect of increases in supply (capacity) are of particular interest in transport economics (see induced demand), as the potential environmental consequences are significant (see externalities below).
In addition to providing benefits to their users, transport networks impose both positive and negative externalities on non-users. The consideration of these externalities - particularly the negative ones - is a part of transport economics. Positive externalities of transport networks may include the ability to provide emergency services, increases in land value and agglomeration benefits. Negative externalities are wide-ranging and may include local air pollution, noise pollution, light pollution, safety hazards, community severance and congestion. The contribution of transport systems to potentially hazardous climate change is a significant negative externality which is difficult to evaluate quantitatively, making it difficult (but not impossible) to include in transport economics-based research and analysis. Congestion is considered a negative externality by economists.
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